THESIS
2019
xi, 150 pages : illustrations, maps ; 30 cm
Abstract
My work seeks to understand two core research questions about the Chinese
economy. The first addresses the economics of intergenerational mobility and child
development in China. The second aims to understand the role of firms in labor
market inequality. Most papers in intergenerational mobility literature use data
to estimate the extent of intergenerational income elasticities in different countries;
however, the research on this topic about China is limited. My work on this stream
of literature comprises two papers which are included in Chapter 1 and Chapter
2 in this thesis. In Chapter 1, I utilize the one-child policy as a natural experiment
to study the impact of fertility on intergenerational mobility. In a simple human
capital investment model incorporating fertility and...[
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My work seeks to understand two core research questions about the Chinese
economy. The first addresses the economics of intergenerational mobility and child
development in China. The second aims to understand the role of firms in labor
market inequality. Most papers in intergenerational mobility literature use data
to estimate the extent of intergenerational income elasticities in different countries;
however, the research on this topic about China is limited. My work on this stream
of literature comprises two papers which are included in Chapter 1 and Chapter
2 in this thesis. In Chapter 1, I utilize the one-child policy as a natural experiment
to study the impact of fertility on intergenerational mobility. In a simple human
capital investment model incorporating fertility and credit constraints, I show
that the fertility decline narrows the educational attainment gap between children
from credit-constrained families and non-credit-constrained families, thus increasing
intergenerational mobility. Estimation results using the instrumental variables
method show that lower fertility increases intergenerational mobility, which is consistent
with the theoretical prediction.
In Chapter 2, we use a unique long panel data from the Gansu Survey of Children
and Families to explore intergenerational mobility in rural China and to examine
the role of cognitive skill, noncognitive skill, and health as intergenerational transmission
channels. This paper find that intergenerational income elasticity is low
in rural areas, and cognitive skill plays the most important role in the intergenerational
transmission of both income and education. Healths role is modest, and
noncognitive skill plays only a minor role as a channel.
The papers mentioned above use various household factors and household investment
models to explain income inequality; moreover, firms might also play a role.
Workers with the same attributes might earn different wages at different firms. To
understand this phenomenon, I explore rent sharing in China’s labor market. Specifically,
in Chapter 3, I use a unique matched employer-employee survey data in China
to examine the impact of firm profitability or productivity on the employees’ wages.
To address the endogeneity of firm profitability, I use the firm’s innovation and
industry mean value in other cities as instrumental variables for firm profitability,
as Van Reenen (1996) and Card et al. (2013). The empirical result shows that the
impact of firms on the wages of workers is small but significantly positive within
the manufacturing industry. Rent sharing elasticities are different across different
types of firms and different groups of workers.
A unifying thread throughout my research is my attempt to better understand
the various sources of human inequality. This inequality starts from the very beginning,
such that children from different families receive different investment at
various growth stages and, hence, turn out to have different labor market outcomes.
Even if they enter the labor market with the same educational background or ability,
the specific firm they work for might also generate a wage dispersion among the
workers.
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